Groupon LogoLiving Social LogoWatch out for the next Groupon or Living Social Deal.  Merchants are raising their prices without you knowing it.

Don't get me wrong: I love Daily Deals from Groupon's and Living Social.  I would say we probably spend $100 a month on daily deals for various things that we never thought we needed.  

Groupon just went public.  There are a lot of people questioning whether Groupon's are good for merchants.  I question whether Groupons or Daily Deals are good for consumers.  One of the consistent problems with Daily Deals from Groupon, Living Social, Amazon Deals, Google and FaceBook is that the merchant raises its prices first and then offers you a ridiculous discount via Groupon, so in the end, you as the consumer don't save much money at all.    There have been some high profile SNAFU's regarding these pricing strategies where businesses have increased prices for Groupon customers.  The most visibile was the FTD Groupon ahead of Valentine's day 2011.  Harvard Business School published a study on this phenomenon recently.  

My wife and I suffered from the Groupon price increasing phenomenon with a Living Social for Seattle Limo Taxi today. Living Social advertised $25 for $50 for a car service.  Crazy good deal.  We bought three since we travel a lot.   On their web site, they advertise the lowest rates in Seattle and that a car from Bellevue to the airport is $39.50.  Car service from our house generally ranges from $50-60 to the airport.  See below picture.

Seattle Taxi Limo Pricing

So we get to the airport, take out the Living Social voucher which says multiple vouchers can be used for multiple trips.  We give the $50 voucher to the driver who then says there is no change.  Based on their web site and having called them prior to booking the Living Social Deal, it should have only been $40 and we should get $10 in change on the voucher for the return trip.  We discuss it for a couple of minutes.  We then call the Seattle Limo Taxi office.  I ask him how much it costs to go from Bellevue to the airport and he says $60.  What?  Now the price went up from $50 to $60 when we were using a Living Social voucher. 

OK, my wife is thoroughly annoyed at this point.  We hand over the $50 voucher and give the driver a $5 tip.  My wife asks, "Should we call up Living Social to cancel the other two vouchers?"  I was in disbelief and said that there must have been some mix up. 

So we decided to call up Seattle Limo Taxi to book another car to see what the price should be:

Me: How much for a car from Bellevue to the airport?
Seattle Limo Taxi: How many people?
Me: 4 - 2 adults, 2 kids
Seattle Limo Taxi: $50
Me: Your web site says $40
Seattle Limo Taxi: That's for three people, you have four.  $10 extra for another person.  Do you want to book it?
Me: No, I am just calling around.
Seattle Taxi Limo: Ok, ok.  I can give it to you for $40 as long as you are NOT using a COUPON.

What???

So here's what I understand of their pricing:

  • $40 on their web site, but no one really pays $40
  • $50 if you call them
  • $60 if you use the Living Social Daily Deal

So should I be upset?  We did get a car ride which is normally $50-60 in price for $25.  Yes, that is a great price.

Regardless, we called Living Social to cancel the other vouchers.  You have 5 days from voucher purchase to cancel a deal and get your money back.  Living Social apologized for the bad experience and  refunded us out money.

But, now that we are Living Social and Seattle Limo Taxi-less, the real question is: can we get a ride from SeaTac airport to Bellevue?  Anyone?  Bueller?

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Post is included in group: BananaTude

46 Comments on Watch Out for the Next Groupon or Living Social Deal = Price Increases

20 Most Recent Comments Displayed Show All

NOV
06
2011
731,668 Points 15 Featured Posts Outside Blog Called Shot Master

Niki, its human nature to jump at what we think is a good deal. It pay to investigate further before accepting one though. Good point and thanks for the heads up.
9:39am • #27
1,361,092 Points 93 Featured Posts Localism Sponsor Outside Blog Called Shot Master

I had a bad experience with an ethnic restaurant with a Groupon recently.  The waiter tried to explain an extra charge to us in broken English.  I read and reread the Groupon, what he said was NOT on the Groupon. I went to Groupons site while we were eating lunch. No mention of an extra charge EXCEPT Groupon's admonishment about local taxes.  When we went up to the cash register and the cashier tried to tell us it was an extra tax. His English was a lot better but he was not able to explain why they had a tax that other restaurants in the area do not charge.  Now I live in the area and eat out in the area often so I knew that was a bunch of BS, so I asked him for a printout of the cash register receipt.  He added the additional amount he was charging  as another food item NOT a tax. My dinner companion left the tip on the full price of the food from the menu (Groupon value + about $5)  and wanted to go retrieve the amount equal to the extra TAX from the tip and give it to me but that would stiff the staff.  

I had another bad experience with a Groupon, but again I think it had to do with a local merchant, (more the employees than the merchants)  being deceitful to increase their profit.

 
10:19am • #28
841,209 Points 69 Featured Posts Outside Blog Called Shot Master

Nikesh...things are in a state of flux...change. Everything is trying to find their footing during these weak economic times. Your taxi example helped me to remember a recent cab ride my son took with friends. The cab driver never used his meter flag and then just arbitrarily came up with a high amount owed. Not triggering the flag when a passenger gets in is against some law. My son the attorney set the guy straight and his pricing too.W must stay alert during these times...
10:34am • #29
654,383 Points 49 Featured Posts Localism Sponsor Outside Blog Called Shot Master

When it comes to food and such, you can keep track of the prices. For services like you had, they can raise it without your knowledge or letting you in on certain facts. That really stinks!
10:49am • #30
1,033,133 Points 239 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Niki- my husband's been watching Group On because they were going public.  No interest in buying though.  I've never used coupons unless it's for something I was going to buy anyway.  
10:50am • #31
1,914,851 Points 386 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

I was surprised to read about the amount the merchants have to pay Groupon.  The idea is to get you into the establishment, wow you with great service and get you back in the door without the coupons.  Basically, your first trip doesn't earn the mercant more than a couple of buck.  Oh well. 
11:13am • #32
385,382 Points 8 Featured Posts Called Shot Master

Niki, if you use limo service, you had a choice to either save $15 with a coupon, or pay the regular discounted price and save nothing.  Although it's not exactly as you may have expected, it seems that the deal was good enough to keep.  It may be good enough to order again. The no-change policy is fairly normal for coupons.

Many service coupons have turned out to not be quite as good as they would seem.  Happenings books and their coupons often have surprises, as well as Val pak, etc. 
12:58pm • #33
103,691 Points 1 Featured Post Called Shot Master

Niki, I haen't used Groupon, because I haven't seen enough coupons of interest to me. I heard their IPO brought in twice what Google offered to buy them and Groupon only sold 5% of their stock. 

Melville Capps

 
1:10pm • #34
179,717 Points 3 Featured Posts Localism Sponsor

Niki, Groupon seems to work very well here in the Coeur d'Alene / North Idaho area.  Great deals and happy merchants.  I have purchased approximately 25 so far.  Anything from services to restaurants to goods.  No problems so far.  I always tip 20+% on the FULL PRICE (not discounted). I guess my only complaint would be... watch the expiration date.  I didn't realize I had to use one of them within 90 days ... it expired.
1:59pm • #35
620,899 Points 8 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

We just recently purchased something from Groupon, redeem it and had a good experience. But I would also call GROUPON and address this with them so they know they are losing creditability if the vendors are scamming the system. The whole idea of Groupon, Living Social and similar services should be saving money and not be scammed.
3:44pm • #36
1,501,833 Points 355 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Niki...

I guess the old adage about a deal too good to be true holds up! Sounds like there is a bit of deception going on here.
5:07pm • #37
186,726 Points Localism Sponsor Outside Blog Attended Rain Camp

Nikesh - Thank you SO much for posting this! I am so sorry you got burned but this just highlights the typical games these companies have played forever! I just booked a hotel room online at $99/ night. Interestingly the AARP or AAA rate was $149 for the same room. I called and spoke to the manager and he said the best rate he could do is $129. He suggested I book the room online ASAP!
It is a sad situation. Thank you for highlighting it.
Bruce

 
8:30pm • #38
438,013 Points 79 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Nikesh, this sounds really, really fishy! No way...I'm sorry you and your wife had to go through this! Not a good recommendation here and I will remember this. EXTRA CHILD...$10.00??? Put him in an overnight carrier and sneak him right back out! They would never notice! LOL...for the ending here...I have no answers. I hope you worked it out. jeesh...what a mess! Unfortunately is sounds like yet another "upsize" scam. Good luck.
9:29pm • #39
413,812 Points 88 Featured Posts Localism Sponsor Outside Blog Called Shot Master

The IPO was generally not locally subscribed. The local press has been largely critical....there is no product, no value added. 

I could go on for hours, but it's late. Maybe tomorrow.

 
10:30pm • #40
873,128 Points 47 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Niki, that is simply bad business. This type of shenanigans is going to hurt Groupon. Just bought $50 at a new restaurant for $25. Hmmmm, we'll see how that works out. Maybe different menus for those with coupons?

Sharon
11:31pm • #41
NOV
07
2011
882,314 Points 10 Featured Posts Attended Rain Camp Called Shot Master

Nikesh, I am not sure if all vendors have the same practice. Though I never bought anything from Groupon, I almost bought the $30 for $300 voucher from JetBlue on Google Offers. 900 vouchers were sold in no time - as I was considering it to be too good to be true - and it was! May be, way to go is to go Google?
12:04am • #42
1,394,269 Points 28 Featured Posts Hit Router Called Shot Master

It's not all that dissimilar to the listing prices of homes, especially for those buyers that want the 50% off listing price!
11:56am • #43
NOV
11
2011

I am bit of a Groupon groupie.  My issue is that I buy them and then forget to use them.  That's not a very good deal for me.
7:17pm • #44
MAR
30
2012
488,382 Points 4 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

I just came across this blog because I was looking at a NYC airport transfer from groupon.  The fine print is definitely a problem, it looks like a way better deal than it really is. 
6:46am • #45
JUL
26
EBaNW3 hrichravoggm
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1:25pm • #46

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Nikesh Parekh

Nikesh Parekh (CEO of ActiveRain)

Bellevue, WA

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